To all the BEARS

I didn't count how many in this thread, but at least a couple. Not the same exact apartments, but the same line...

http://www.streeteasy.com/nyc/talk/discussion/3339-if-you-can-demonstrate-market-movement-with-comps-please-post-here

That is how you would define a buyers market? Alrighty then. You know, it cost about 4.5% to buy a condo and, 1.75% or so to buy a co-op and about 6-8% or so to sell it, in transaction costs. So, if you find a property that sold for 5% more than it was purchased, chances are the original buyer took a loss.

But to discuss more productively, I would define a buyers market as a market where buy side demand is greatly diminished, sales volume is way down, and inventory levels are way up. In this type of market, sellers compete fiercely with each other to move property, making it counterproductive in general for sellers. A market like Miami, Phoenix, and some neighborhoods out in Suffolk county LI come to mind. I was just selling my mothers house in East Northport, LI, and it took 11 months and 20% off the asking price to move. Every time we lowered the price, within a month, 5 new places lowered their price more than us. So we had to lower again; feeding the cycle. Buyers were so scare that it was only when a great deal presented itself that traffic rose and an acceptable bid came in. Thats a buyers market.

Manhattan is not even close to this right now; although inventory is up and sales volume is down, we are not anywhere near a market that has fierce seller competition and a total drying up of demand.

urbandigs, when do you predict this will happen in Manhattan? Or do you think this would eventually happen in Manhattan in the near future?

very difficult to say because alot of things have to happen and out market has such a different mix of buyers...buyer confidence needs to fall much farther, jobs need to feel like they can be lost at any time, sales volume needs to fall for many quarters in a row, inventory needs to rise much more than it is now, etc..

Manhattan housing has a history of lagging recessions and leading in recovery. So, while a correction may certainly come, the question is will buyers jump in and take deals OR will they be scared not to catch a falling knife. We have to see how confidence is at that time. One thing is for sure, price data (which is big time lagging and includes lagging new dev deals that were signed in 2007, and closing in 2008) is likely to NOT show price declines for the next few quarters. New dev deals will help skew price data to upside. That may not be representative of current market (look to sales vol and inventory levels for that). However, when/if price data does show declines, the media will go nutz with it and that might affect confidence and feed the cycle a bit.

Lots of unknowns and variables.

When the price data eventually shows that prices are declining in Manhattan, the media will essentially tell everyone to hide in their bunkers and transaction volumes will fall dramatically.

Citibank laying off 10,000 highly compensated individuals in their New York investment unit will not help demand. Unfortunately, this is one of many shoes to drop in the financial sector. We all know that the financial sector is the primary demand engine in the New York Real Estate market. I just went to contract in Downtown Brooklyn for a price that was below market, IMHO, by about 5%. The market is moving downward in many of the surrounding developments are coming more in line with my contract price.

Obviously, Brooklyn is peripheral to Manhattan but one might consider Brooklyn the canary in the coal mine though Manhattan is obviously a world upon itself with such limited space and worldwide demand.

I have been in the optimistic camp for some time, but I do think the layoffs on wall st is going to crush this mkt (and I work there). 20% gross reduction in staff, with many of them being MDs (very different from 2001 when layoffs affeced largely settlement/backoffice area). Whatever industry you are in, compare it to the people in your department who have consistently outperformed for over 10 yrs, worked hard, ie the LAST people you figure would get let go. And the imagine dozens of them let go every month. This is not hyperbole it is happening in every financial related firm in ny. This is affecting the core of affluent / family buyers in NYC. I am extremely concerned with what this means for our tax base and the quality of life in NYC (read crime)which has had as much of an impact as interest rates on families moving here vs the suburbs.

Seven posts already and none of them list a single unit being sold under the price it was bought begore!!!

http://www.cnbc.com/id/25347147

Tony - Diane Ramirez, the president of Halstead Properties, is on that link, saying that Manhattan real estate remains strong.

Such sourcing!

weasel-boy, stop posturing and just give the OP the five examples they've requested.

Stay on point, for once in your life.

chespirito: Here's one (assuming the sale price was at or below the final asking price):
http://www.streeteasy.com/nyc/sale/184239-coop-515-west-end-avenue-upper-west-side-manhattan

Only a $50K drop from the purchase price in 2005 to the final asking price in 2008 - doesn't look like a big deal. But when you factor in transaction costs and nearly three years of inflation, the owners are taking a pretty big hit to their real net worth. I think we'll see more of these situations, where a change in job situation (in this case, an early retirement after the owner relocated to NYC for the job) leads to a motivated sale.

Here are two more, which happen to be foreclosures in the same building, with the same investor losing both properties. He paid $1.3MM for each. They sold for $919.8K and $1.132MM respectively.
http://www.streeteasy.com/nyc/closing/726129
http://www.streeteasy.com/nyc/closing/655187

The lower-priced apartment (#6A) requires a bit of an asterisk, because it was purchased at foreclosure by one of the lienholders; so the effective price was probably closer to $1.1MM when the lien is taken into account. Still, it's a very substantial drop. More telling than the foreclosure prices, I think, is the fact that the investor walked away. Maybe he got in over his head, or maybe he made a rational decision in a negative-equity scenario.

And another, from the luxury market, with the owrner of the Minnesota Twins taking a $700K loss (plus inflation and transaction costs) and a tarnished Wall Street star nabbing a relative bargain:

115 Central Park West, #7F
--------Recorded Sales----------|--------Previous Listings----------
05/29/2008 #7F $7,500,000 -6.2% | $7,995,000 ↓ 3 beds 3 baths
06/07/2006 #7F $8,200,000 ----- |

http://www.streeteasy.com/nyc/closing/732558

Impossible West81st. Prices in Manhattan NEVER go down.

Quite right, alpine292. Mr. Pohlad needed a loss for tax purposes, and he owed Abby a favor for all those great tips on financial stocks. I'm sure there's a similar explanation for the other examples.

In her mind S&P never goes down. Now she can add to her prediction that Manhattan RE also never goes down.

http://www.streeteasy.com/nyc/building/524-east-72-street-manhattan

Here's one- 26B, hasn't closed, but is listed below its cost.

As the little black arrows rain down, this will go down as one of the dumber challenges on these boards.

http://www.streeteasy.com/nyc/building/250-east-87-street-manhattan

22D- sold for $16K above cost over ~ 3yr period...

You people are just posturing.

Manhattan real estate never falls in value.

Now is a great time to buy in prestigious Wall St. bonus European investor dominated Manhattan.

Call a REALTOR today.

True, alpine, but if you do earn your living in another currency and the dollar appreciates in value, you have to watch what happens to those pesky monthly mortgage payments.

Also, don't forget that co-ops don't allow pieds-au-terre or subletting so investment properties did NOT drive up property prices, but the Europeans - who buy pieds-au-terre and sublet - are the ones going to save the market.

Am I clear?

chespirito, is this a joke? If not, I think you got your 5 examples, so own up and say "uncle." All kidding aside, urbandigs has got the right thinking here - once we get past who's right and who's wrong, there's still a ways to go before it's a clear buyer's market. I haven't been actively shopping since March, but still seems like we're in a gray area, where it could go either way in the near-term. I'm happy to sit back and watch though - it'll be interesting at the very least.

Btw, stevejhx, it's a "pied-a-terre," not "pied-au-terre." Nitpicking when this isn't all in French, but thought I'd clarify.

If we tried hard enough, I am sure that we can come up with nearly 100 sales in which the seller is taking a loss.

So shut up, and do it, then.

Am I clear?

You're right bjw - I've hired sizzlack as my editor.

malraux: "Am I clear?"

My, my, my, when backed into a corner, mon frere (did I spell that right?) gets very testy.

Another thing we're starting to see - I wouldn't call it a trend yet - is early buyers in conversions and new developments trying to cut their losses by bailing out without ever taking possession. Here's an example...
In contract (and counted toward the 15% sales needed to declare the condo plan effective):
http://www.streeteasy.com/nyc/sale/165314-condo-219-west-81st-street-upper-west-side-manhattan
But also on the market:
http://www.streeteasy.com/nyc/sale/314784-condo-219-west-81st-street-apt-7e-upper-west-side-manhattan

Gotta hand it to West81st- you are a true sleuth.

"Another thing we're starting to see - I wouldn't call it a trend yet - is early buyers in conversions and new developments trying to cut their losses by bailing out without ever taking possession."

This is not surprising. In fact, Noah over at UrbanDigs predicted this would happen last year, as buyers who signed contracts before the credit crunch occurred cannot get financing in today's market. Seriously, if you guys want to stay ahead of the curve, you should read UrbanDigs.

Actually, it's going to happen to a friend of mine in Miami....

WAIT! THIS IS NOT MIAMI!

Stupid, stupid, stupid me! Not to mention you, alpine: to think that people in Manhattan - these sophisticated financial types - would have been so dumb as to sign a contract on an apartment in a building that doesn't exist without a mortgage contingency, dropping, oh let's say a quarter million or so as a deposit, and then they lose their jobs or can't get financing or can't afford the financing they can get, or heaven forbid they have to move...

...unless they're EUROPEANS taking advantage of the cheap dollar!

Yay! Yay! Yay to the Europeans!

Save us from ourselves!

Thx Alpine!

OCT 9 2007 - http://www.urbandigs.com/2007/10/new_dev_closings_reason_to_wor.html

What no one wants to discuss is:

WHAT ABOUT ALL THE BUYERS THAT SIGNED CONTRACTS ON EXPENSIVE NEW DEVELOPMENT PROPERTIES BEFORE THIS MESS HIT, AND WILL NOW CLOSE THEIR DEAL IN A LENDING ENVIRONMENT THAT IS TIGHTER & MORE EXPENSIVE?

On Contract Re-Assignments April 29th, 2008 - http://www.urbandigs.com/2008/04/contract_reassignments_a_sign.html

Many European economies are staritng to slow down, so expect the # of European buyers to decline.

But not to worry, there are still plenty of Arab buyers with pockets full of oil money! YEAH! Thank you Saudi Arabia for protecting the value of my 1 bedroom 5th floor walk up!!

Took Noah less than half an hour to find a plug for himself.
Thanks for the link...!

alpine you are just so WRONG. I hate you. I hope you crawl in a hole and die.

Didn't somebody say something like that to you? The same person had happy thoughts for me, too, on another thread.

My my my how the tone here has changed since March. Or since the winter when I started to post and everybody was predicting that Manhattan was immune to the housing slowdown.

Not only is it not immune, it's going to be worse than the rest of the country. Wall Street is not coming back to its old glory anytime soon, and if commercial banks do wind up buying investment banks as seems likely, there won't be such huge bonuses ever because commercial banks don't like to pay them.

Steve:

alpine you are just so WRONG. I hate you. I hope you crawl in a hole and die.

lololol
My, my, my, when backed into a corner, mon frere (did I spell that right?) gets very testy.

With layoffs on wall street and a struggling economy, of course there will be some weakness in housing. But the fact is that nice, new buildings in desirable neighborhoods continue to have plenty of buyers. There are generally not comparable rentals available to many of these, so the rent/buy comparison can't really be done.

Case in point:
http://www.streeteasy.com/nyc/building/52-east-4-street-new_york

And if anyone comes back and says that the east village isn't desirable, well then you proved my point even further. (I doubt superior ink is having much trouble finding buyers in the west village)

No different than looking at a house in Greenwich - not too much in the way of rentals there, but somehow, people decide how much they want to pay for houses without figuring out what a comparable rental would run them. If you're looking at a cookie-cutter apartment in chelsea or murray hill that has comparable rentals, and it's cheaper to rent, then rent.

eah - your wrong. it was more like 45 minutes

I gotta stay in the loop with my streeteasy people!!

"of course there will be some weakness in housing."

That's the understatement of the year.

"But the fact is that nice, new buildings in desirable neighborhoods continue to have plenty of buyers."

Which is why inventories continue to rise.

Remember- Europeans can't buy in co-ops which don't allow pied a terres (those in which the owners don't show up for months at a time).

That's not true because Jonathan Miller and Dottie Herman and Diane Rodriguez all say that Europeans are swooping in by the planeload, buying everything up.

Get with it man.

Europeans buy into co-ops all the time. They generally just have to agree to not rent the units.